Kempen Lux Euro Credit Fund - Class I

Profile

Kempen International Funds SICAV - Kempen (Lux) Euro Credit Fund (the Fund) invests primarily in credits that have an investment grade rating (of minimal BBB-) and are denominated in Euros. The Fund may invest a small part in credits that are not included in the benchmark. The benchmark, the Markit iBoxx Euro Corporates Index, only includes bonds with an investment grade rating.

The Fund aims to earn a higher total long term return than the benchmark by implementing an active investment policy. In order to achieve this, a diversified portfolio is constructed and investment risks are continuously monitored. Investments are selected on the basis of extensive analysis of the terms and conditions of the bond issues.

In the interest of the shareholders it has been decided to soft open the Fund as per 28 June 2018. As per June 2018 the Fund will continue to accept daily inflow below EUR 10 million from all investors. For investments greater than EUR 10 million please contact the Fund’s relationship manager. Redemptions will still be possible. More information about the soft open can be found in the Notice to shareholders in the tab Documents.

Management team

Alain van der Heijden, Rik den Hartog, Harold van Acht, Sipke Moes, Luuk Cummins, Pim van Mourik Broekman, Quirijn Landman, Marco Zanotto

Performance per 2020-04-30 (rebased)

No chart data available

Performance per 2020-04-30

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  Fund Benchmark
1 month 3.7 % 3.7 %
3 months -2.9 % -3.8 %
This year -1.7 % -2.7 %
2017 2.4 % 2.4 %
2018 -0.8 % -1.3 %
2019 6.7 % 6.3 %
1 year (on annual basis) 0.7 % -0.5 %
3 years (on annual basis) i 1.9 % 1.2 %
5 years (on annual basis) i 2.1 % 1.5 %
Since inception (on annual basis) i 5.1 % 4.1 %
On 20 June 2013, Kempen Euro Credit Fund (KECF) was merged with Kempen (Lux) Euro Credit Fund (the Fund). Up to July 2011 (start of the Fund class I) the performance graph and performance table show the performance of KECF. The average annual TER for the period of April 2008 till June 2013 is 0.92%. Performance is shown after deduction of ongoing charges. The value of your investments may fluctuate. Past performance provides no guarantee for the future.
More information can be found on the documents page of this fund

Key figures

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Total fund size
EUR 1,859.08 M 2020-04-30
Share class size
EUR 1,227.40 M 2020-04-30
Number of shares
840,630 2020-04-30
Net Asset Value i
EUR 1,457.19 2020-05-26
Turnover rate
253.44 %
Morningstar rating â„¢
Morningstar Analyst rating
Gold
The turnover rate figure is per the end of the financial year of the fund and will be updated once a year.

Fund characteristics per 2020-04-30

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  Fund Benchmark
Number of holdings 311 2882
Duration i 5.4 5.1
Yield to maturity 1.2 % 1.3 %
Weighted rating A- A-
Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

Market developments per 2020-04-30

In April, the spread on the iBoxx Euro Corporate Index tightened by 59 basis points to 193 basis points above the government bond curve. The index earned an absolute return of +3.72%. German 10-year government bond yields closed April at -0.59%, a decrease of 12 basis points compared to the end of March.

Investor sentiment improved greatly during the month, primarily as a result of two main developments. Firstly, despite the number of people infected with the COVID-19 virus surpassing the 3 million mark globally, investors took comfort from the fact that in most developed countries, the rate of new infections has materially slowed. In some European countries, such as Denmark, Austria and Switzerland, “lock-downs” are gradually being loosened, with a limited number of economic activities (e.g. primary education, retail) tentatively being allowed to restart. With the Chinese economy now being viewed as a potential template for how western economies can gradually return to normality, investors are speculating that as this year progresses, more and more parts of the economy will be allowed to resume functioning. Furthermore, news reports suggesting two existing medicines could significantly reduce the lethality of the virus (Gilead’s remdesivir and Roche’s actemra) raised investors’ hopes that the worst of the pandemic outbreak, from a healthcare system perspective, could soon be behind us.

Secondly, investors are increasingly confident that governmental policymakers will not hesitate in applying ever more fiscal and monetary stimulus to prevent the global economy from collapsing and an accompanying sharp spike in bankruptcies amongst corporations and individuals from taking place. During April, for example, the US Federal Reserve increased the size of its corporate bond buying program to USD 750 billion, whilst also broadening eligibility criteria to include fallen angels (in this case companies that have been downgraded since the 22nd of March) and high-yield exchange-traded funds (ETFs). On the fiscal stimulus front, after having seen an initial USD 349 billion small business aid program fully utilized in a matter of days, the US Treasury and US Congress quickly reached an agreement to launch a second fiscal stimulus program now totaling USD 484 billion. Of this amount, more than USD 300 billion will be used to replenish the small business aid program. In Europe, the ECB has broadened the type of collateral it will accept from banks to now include non-investment grade bonds, in particular those bonds issued by the so-called “fallen angels” that were previously investment grade rated. Furthermore, at the end of the month, the ECB lowered the interest rate on its targeted longer-term refinancing operations (TLTRO) program to 50 basis points below the rate at which banks can stall excess liquidity at the bank, thereby greatly supporting the liquidity of the European banking system and its ability to purchase sovereign bonds in a profitable manner.

Whilst responding favorably to the above-mentioned developments, credit markets are shrugging off extremely weak underlying macroeconomic data. The latter highlight the severe damage that is being afflicted on the global economy as a result of the ongoing “lock-downs” throughout Europe and large parts of the United States. For instance, in France, the Manufacturing and Services PMIs declined to 31.5 and 10.4, respectively. In the US, PMI figures were not much better with Manufacturing and Services coming in at 36.9 and 27.0, respectively. Unemployment in the United States is rising rapidly, with the number of Americans filing for unemployment benefits having increased to 30.3 million individuals since Covid-19 broke out in the country.

The impact of the COVID-19 pandemic on Q1 earnings was rather limited, given that companies were largely operating in a normal manner during the months of January and February. That being said, management teams are warning that Q2 results will be significantly worse. This is particularly true for those companies whose products or services are not deemed to be “essential” by governmental authorities (e.g. aviation, travel & leisure) or that are highly dependent on consumer and business confidence (e.g. automotive, industrial goods & services). In response to the deteriorating economic outlook, many companies continue to announce substantial cuts to their workforce and to their capital expenditure programs. From a credit cycle perspective, management teams have clearly begun to prioritize liquidity and their company’s balance sheets over near-term shareholder interests. Share buyback programs and dividends are frequently being cancelled or at least reduced, whilst there has also been a notable increase in the number of companies issuing fresh equity.

During the month, subordinated bonds issued by insurance companies and banks, as well as bonds issued by companies in the Automotive and Basic Resources sectors outperformed. By contrast, bonds issued by companies operating in the Real Estate, Media, Oil & Gas and Industrial Goods & Services sectors underperformed.
The supply of new bonds was EUR 81 billion in April, representing a 35% increase compared to March and a more than doubling compared to the year-earlier period. Non-financial sector companies issued EUR 58 billion in new bonds last month, while financial sector companies issued EUR 23 billion in new bonds. During the first four months of the year, a total of EUR 243 billion of bonds were issued. This represents a 29% increase compared to the year-earlier period.

Portfolio developments per 2020-04-30

During the month the portfolio’s sensitivity to market trends varied between 97% and 102%. The portfolio therefore held a relatively neutral positioning in terms of market risk.

Our positioning in the telecom, real estate and food & beverage sectors performed relatively well in April. In contrast, our positioning in the healthcare, technology and banks sectors contributed negatively. Our liquidity position (in the form of cash and government bonds) had a negative impact.

At individual company level, positive contributions came from the overweights in AB Inbev, Unilever, General Electric, Glencore and Verizon Communications, as well as from our underweights in Unibail-Rodamco and ENI. In contrast, the overweights in TVO, Bank of America, GlaxoSmithKline, Groupe Bruxelles Lambert and Huntsman Corporation, as well as from our underweights in Banco Santander and Daimler contributed negatively.

In April, the Fund participated in new bond issues from Schiphol Airport, Total, Lloyds Bank Corporate Markets, Naturgy, Svenska Handelsbanken, Veolia Environnement, Cap Gemini, SSE, JAB Holdings, Honda, Lonza, Givaudan, BPCE, Elia, Firmenich Productions, Wells Fargo, Holding d’Infrastructures de Transport (HIT), Credit Mutuel Arkea, Banco Santander, Pepsi, Signify and UBS.

Outlook
Given our concerns about the negative effect that the sharp economic downturn will have on corporate profitability, we intend to retain a defensive positioning in our portfolio with a focus on quality. We expect our portfolio to, therefore, be well protected in the event the impact of the corona virus on the economy grows in severity. Having said this, we will be vigilant in looking out for relative value opportunities that arise as a result of the increased market volatility, including participating in new bond issues that are priced with substantial premiums. For the moment we refrain from adopting a significant underweight positioning, primarily given the ECB’s large-scale corporate bond buying program.
Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

Performance per 2020-04-30 (rebased)

No chart data available

Performance per 2020-04-30

Slide to see more
  Fund Benchmark
1 month 3.7 % 3.7 %
3 months -2.9 % -3.8 %
This year -1.7 % -2.7 %
2017 2.4 % 2.4 %
2018 -0.8 % -1.3 %
2019 6.7 % 6.3 %
1 year (on annual basis) 0.7 % -0.5 %
3 years (on annual basis) i 1.9 % 1.2 %
5 years (on annual basis) i 2.1 % 1.5 %
Since inception (on annual basis) i 5.1 % 4.1 %
On 20 June 2013, Kempen Euro Credit Fund (KECF) was merged with Kempen (Lux) Euro Credit Fund (the Fund). Up to July 2011 (start of the Fund class I) the performance graph and performance table show the performance of KECF. The average annual TER for the period of April 2008 till June 2013 is 0.92%. Performance is shown after deduction of ongoing charges. The value of your investments may fluctuate. Past performance provides no guarantee for the future.

Dividends

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Distributing
No
Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

Maturity profile (2020-04-30)

Fund
Benchmark
23.9 %
3-5 year
26.7 %
22.9 %
5-7 year
20.8 %
21.4 %
0-3 year
27.3 %
18.8 %
7-10 year
16.3 %
11.4 %
> 10 year
9.0 %
0.8 %
Cash
0.0 %
1.1 %
Other
0.0 %
Total
100 %
100 %

Sector allocation (2020-04-30)

29.7 %
Banks
14.8 %
Consumer Goods & Services
10.5 %
Utilities
9.4 %
Telecom & Technology
7.4 %
Health Care
7.2 %
Industry
7.1 %
Financial Services & Real estate
4.3 %
Insurance
3.0 %
Energy
2.7 %
Other
1.9 %
Basic Materials
1.8 %
Sovereign bonds
0.4 %
Asset Backed Securities
Total
100 %
The cash position is included in ‘Other’.

Rating allocation (2020-04-30)

Fund
Benchmark
1.8 %
AAA
0.4 %
2.7 %
AA
10.5 %
39.5 %
A
41.3 %
50.0 %
BBB
47.8 %
2.7 %
BB
0.0 %
2.5 %
Not Rated
0.0 %
0.8 %
Cash
0.0 %
Total
100 %
100 %
The rating allocation of the Fund is based on the Bloomberg Composite method. The rating allocation of the benchmark is based on the rating allocation used by provider Markit iBoxx.

Top 10 holdings (2020-04-30)

1.2 %
2.875% Anheuser-Busch 2020-32
1.1 %
JPMorgan EUR Liquidity LVNAV Fund C
0.9 %
0.000% KFW 2017-22
0.9 %
0.500% Duitsland 2016-26
0.8 %
0.000% Enel 2019-24
0.8 %
0.625% BPCE 2018-23
0.8 %
1.500% FIS 2019-27
0.8 %
0.500% Banque Fed Cred Mutuel 2018-22
0.7 %
0.250% La Banque Postale 2019-26
0.7 %
1.125% Orange 2019-24
Total
8.6 %
Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

 

SWING FACTORS

An overview of the current swing factors are available here.

Ongoing charges

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Management fee i
0.32 %
Service fee i
0.10 %
Taxe d'abonnement i
0.01 %
Expected ongoing charges i
0,43 %
Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

Share class details

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Share class
I i
Investor type
Institutional
Distributing
No
Benchmark i
Markit iBoxx Euro Corporates Index
Duration hedged
No
Investment category
Credits
Universum
Credits denominated in euro
Inception date
2011-07-01
Domicile
Luxembourg
May be offered to professional investors only in
Belgium, Finland, France, Germany, Italy, Luxembourg, Spain, Sweden, Switzerland, The Netherlands, United Kingdom
UCITS status i
Yes
Status
Open-end i
Base currency
EUR
Share class currency
EUR
Management company
Kempen Capital Management N.V.
Depositary and custodian
J.P. Morgan Bank Luxembourg S.A.
Morningstar rating â„¢
Morningstar Analyst rating
Gold

Tradability

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Minimum subscription
Initial subscription: €50,000, additional subscriptions: €10,000
Listed
no
Subscription/Redemption Frequency
Daily
ISIN i
LU0630255346
Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.
Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.

Kempen's vision and mission

Kempen Capital Management is an asset manager that believes in stewardship and investment focusing on the long-term for the benefit of all stakeholders. Value creation is at the heart of the services we provide to our clients. We believe that being an engaged shareholder on environmental, social and governance (ESG) issues and retaining a long-term focus, is critical to helping our clients to preserve and create sustainable wealth that has positive real world impact and economic returns.

Kempen wide approach to responsible investment

We are committed to create sustainable alpha. The four pillars of our ESG-policy are:

  • ESG integration: Ensuring sustainability risks and opportunities are adequately considered in our investment analysis and processes.

  • Exclusion & avoidance: Not investing in companies involved in controversial activities or conduct.

  • Active ownership: Being responsible stewards of our clients’ capital and using our influence through engagement and voting to improve corporate behaviour on specific ESG issues and achieve positive change

  • Positive impact: Investing with an objective to achieve positive real world outcomes and impact, such as contributing to the UN Sustainable Development Goals.

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To put our mission and vision into practice we engage with our investee companies on a wide array of strategic, financial, and ESG topics. As an active owner we use our influence to improve our investee companies’ ESG performance.  This helps us address some of the most pressing and important sustainability issues facing business and the world. Our focus themes for engagement are: human rights, labour rights, climate change and governance.

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Through collaboration with other investors and industry think tanks we contribute to the development of principles and standards of corporate responsibility both at sector levels, as well as investee company level.

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Our full voting records are available here.

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OUR FUND APPROACH TO RESPONSIBLE INVESTMENT

Kempen’s ESG policy is fully implemented in our fund’s investment process across the three relevant pillars of:  Exclusion, Integration and Active ownership.

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1. Exclusion

In line with the general Kempen policy, the Kempen Euro Credit Strategies[1] exclude all companies on the KCM exclusion- or avoidance list. Companies on these lists are either involved in the production of controversial weapons, they derive a significant portion of their revenues from the production or distribution of tobacco, or have been involved in serious controversies.

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2. ESG Integration

Responsible Investment in the Kempen Euro Credit Strategies is not limited to the exclusion of companies. Rather, ESG criteria are an integral part of the investment process. To form a fundamental opinion on a company, the portfolio managers assess the business profile, the financial profile and the ESG profile. Research provided by MSCI ESG Research LLC is used as a basis for the ESG assessment.  Â

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A low score on ESG criteria can result in the demand for an additional premium on the company’s bonds and/or initiation of an engagement with the issuer. If ESG risks are deemed too severe, an investment in the company will be avoided and/or existing holdings will be sold.

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On a quarterly basis, the Kempen Responsible Investment team screens the holdings of the Kempen Euro Credit Strategies, and discusses the findings with the portfolio managers. Special attention is paid to companies scoring an MSCI ESG rating of B or lower, those with a ‘fail’ marked against the criteria of the UN Global Compact or those companies that attract a red flag on the MSCI ESG impact monitor. Companies in carbon intensive sectors are also given special attention.

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3. Active Ownership

For our Kempen Euro Credit Strategies, we distinguish between three types of engagement. They are i) an engagement for awareness, ii) an engagement for change, and iii) a public policy and/or systemic engagement. Engagement for awareness is aimed at raising awareness on certain issues with a company and/or collecting more information on a specific ESG issue. Engagement for change, which could follow an engagement for awareness, has the goal of achieving a specific SMART goal. The third form of engagement relates to seeking an improvement in a public policy or a system relevant to wider capital markets

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Our engagement process defines four milestones:

1. Raise concern with the company;

2. Company acknowledges the issue;

3. Company sets out a strategy / agrees to improve;

4. Company implements the strategy. Â

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Our engagement could start at any of the first three milestones. When a milestone is reached, a document of proof is attached to the engagement case and the engagement will move on to the following milestone. When the fourth milestone is reached, the engagement is closed, but we continue to monitor the company. If at any stage the company refuses to cooperate, divestment has to be considered. To measure willingness to cooperate, we set specific timelines for the engagement.

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The Kempen Euro Credit Strategies, began an engagement with Bayer in 2018, following their acquisition of Monsanto. Through the acquisition, Bayer inherited several significant controversies in the field of genetically modified organisms (GMOs). The goal of our engagement is to get a formal and written statement from the company which states that they will not sue small holder farmers for the unintended use of Bayer licensed GMO crops. It also asks the company to set a target for the number of farmers that receive education on their crop protection products.

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In addition we have ongoing engagement cases with Volkswagen on its company culture, Cez on the use of thermal coal (you can find the engagement factsheet here), Glencore on climate action (you can find the engagement factsheet here) and Huntsman on ESG disclosure. In July 2018, Huntsman was upgraded from ‘CCC’ to ‘B’ by MSCI ESG, and the company’s Sustainability report, published in 2018, includes an overview of its progress towards alignment with the UN Global Compact Ten Principles for the first time.

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[1] The Kempen (Lux) Euro Credit Fund, Kempen (Lux) Euro Credit Fund Plus, Kempen (Lux) Euro Sustainable Credit Fund and Kempen (Lux) Euro High Yield Fund

Risks

For more information about the mid and long term risks associated with the investments:

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*

Although Kempen Capital Management N.V.’s information providers, including without limitation, MSCI ESG Research LLC and its affiliates (the “ESG Parties”), obtain information from sources they consider reliable, none of the ESG Parties warrants or guarantees the originality, accuracy and/or completeness of any data herein. None of the ESG Parties makes any express or implied warranties of any kind, and the ESG Parties hereby expressly disclaim all warranties of merchantability and fitness for a particular purpose, with respect to any data herein. None of the ESG Parties shall have any liability for any errors or omissions in connection with any data herein. Further, without limiting any of the foregoing, in no event shall any of the ESG Parties have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.
ESG Report
Screening MSCI ESG Research
Screening MSCI ESG Research
UN global impact
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Kempen (Lux) Euro Credit Fund (the “Sub-Fund”) is a sub-fund of Kempen International Funds SICAV (the “Fund”), domiciled in Luxembourg. This Fund is authorised in Luxembourg and is regulated by the Commission de Surveillance du Secteur Financier. Kempen Capital Management N.V. (KCM) is the management company of the Fund. KCM is authorised as management company and regulated by the Dutch Authority for the Financial Markets (AFM).

Paying agent and representative in Switzerland is RBC Investor Services Bank S.A., Esch-sur-Alzette, Zurich Branch, Bleicherweg 7, CH-8027 Zurich. The Sub-Fund is registered with the Dutch Authority for the Financial Markets (AFM) under the license of the Fund.

The information in this document provides insufficient information for an investment decision. Please read the Key Investor Document (available in Dutch, English and several other languages, see website) and the prospectus (available in English). These documents as well as annual report, semi-annual report and the articles of incorporation of the Fund are available free of charge at the registered office of the Fund located at 6H, route de Trèves, L-2633 Senningerberg, Luxembourg, at the offices of the representative in Switzerland and on the website of KCM (www.kempen.com/en/asset-management). The information on the website is (partly) available in Dutch and English.

The Sub-Fund is registered for offering in a limited number of countries. The countries where the Sub-Fund is registered can be found on the website. The value of your investment may fluctuate. Past performance provides no guarantee for the future. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.